21)Consider a binomial world in which the current stock price of 100 can either go up by 10 percent or down by 10 percent. The risk-free rate is 4

percent. Assume a two-period world. What is the theoretical value of the American call with an exercise price of 100?

Answers: 9.51

6.73

9.62

9.89

22)

Consider a binomial world in which the current stock price of 100 can either go up by 10 percent or down by 10 percent. The risk-free rate is 4 percent. Assume a two-period world. What is the theoretical value of the American put with an exercise price of 105?

Answers: 5.49

3.08

5.00

4.33